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The New York Times columnist explains how California’s success puts conservative dogma to shame

In his latest column for the New York Times, award-winning economist and best-selling author Paul Krugman argues that California’s recent success — and Kansas’ ongoing failure — is yet more proof that conservative anti-tax dogma “is nonsense.”

After citing Justice Brandeis’ famous claim that America’s states are laboratories for democracy, Krugman turns to compare and contrast California and Kansas, noting that while the former state has seen economic growth and a successful implementation of Obamacare, the latter has had a stagnant economy and a ballooning deficit.

Not incidentally, these states decided to take opposite approaches to economic policy, with California embracing “a modestly liberal agenda of higher taxes, spending increases and a rise in the minimum wage” while Kansas “went all-in on supply-side economics, slashing taxes on the affluent” only to see paltry growth and a darkening fiscal picture.

“If tax increases are causing a major flight of jobs from California, you can’t see it in the job numbers,” Krugman writes. “Employment is up 3.6 percent in the past 18 months, compared with a national average of 2.8 percent; at this point, California’s share of national employment, which was hit hard by the bursting of the state’s enormous housing bubble, is back to pre-recession levels.”

Does Krugman expect the California example to change conservatives’ minds? Hardly. “Has there been any soul-searching among the prophets of California doom, asking why they were so wrong?” he asks. “Not that I’m aware of. Instead, I’ve been seeing many attempts to devalue the good news from California by pointing out that the state’s job growth still lags that of Texas, which is true, and claiming that this difference is driven by differential tax rates, which isn’t.”

For the big difference between the two states, aside from the size of the oil and gas sector, isn’t tax rates. it’s housing prices. Despite the bursting of the bubble, home values in California are still double the national average, while in Texas they’re 30 percent below that average. So a lot more people are moving to Texas even though wages and productivity are lower than they are in California.

And while some of this difference in housing prices reflects geography and population density — Houston is still spreading out, while Los Angeles, hemmed in by mountains, has reached its natural limits — it also reflects California’s highly restrictive land-use policies, mostly imposed by local governments rather than the state. As Harvard’s Edward Glaeser has pointed out, there is some truth to the claim that states like Texas are growing fast thanks to their anti-regulation attitude, “but the usual argument focuses on the wrong regulations.” And taxes aren’t important at all.

If the GOP as a whole has pretty much given up on the whole “rebranding” thing, their 2012 vice presidential nominee, Congressman Paul Ryan, most definitely has not. In fact, rebranding is pretty much his thing, regardless of how credible — or incredible, actually — his efforts may be.

For years, Ryan touted himself as an avid Ayn Rand disciple, until he didn’t in early 2012, even calling it “an urban legend” that he had anything serious to do with Rand at all. He then tried to present the latest iteration of his draconian soak-the-poor/shower the rich budget proposal as grounded in Catholic social teaching, rather than Rand’s fiercely anti-Christian philosophy, a claim that the conservative U.S. Conference of Catholic Bishops soundly rejected, writing that his proposed budget failed to meet certain “moral criteria” by disproportionately cutting programs that “serve poor and vulnerable people.”

Setting the massive contradictions aside for the moment, it’s not an absurd idea in theory. The modern European welfare state was actually invented by conservatives, beginning in Germany, under the first post-unification chancellor, Otto von Bismarck. But this happened in the face of a powerful socialist movement, amidst tremendous dislocations, as well as international pressures that gave German elites powerful reasons to want to make life in Germany much more tolerable for the German people as a whole. In short, when the real-world political incentives are there, history shows that conservatives really can find effective ways to help fight poverty. The only problem is, the solutions they come up are the very thing that cause conservatives today, like Ryan and his Tea Party brethren, to foam at the mouth, and call “socialism!”

What was a surprise, at least to some, was the utter clumsiness of how Ryan’s new focus on poverty got him into trouble on race. He went onto Bill Bennett’s radio show and channelled Newt Gingrich from the 2012 primaries:

We have got this tailspin of culture, in our inner cities in particular, of men not working and just generations of men not even thinking about working or learning the value and the culture of work, and so there is a real culture problem here that has to be dealt with.

Ryan also cited Charles Murray, white nationalist author of “The Bell Curve.” While many people took him to be speaking in racial code, it was arguably even worse if he was not, as Brian Beutler pointed out:

But if Ryan genuinely stumbled heedless into a racial tinderbox then it suggests he, and most likely many other conservatives, has fully internalized a framing of social politics that wasdeliberately crafted to appeal to white racists without regressing to the uncouth language of explicit racism, and written its origins out of the history.

Of course, something like this has actually happened repeatedly throughout the history of white supremacy in America: True origins are constantly being erased, nefarious intentions hidden, unspeakable injustices naturalized. But what I find fascinating about Ryan is how self-assuredly he switches from all-knowing to naif, without for a moment even thinking this might tarnish his moral authority in any way. He later said his comments had “nothing to do” with race, and the next day issued a statement saying, “After reading the transcript of yesterday morning’s interview, it is clear that I was inarticulate about the point I was trying to make.” There was no sense of moral responsibility at all, no sense that he owed anyone an apology. (This is all quite typical of a psychopathic personality — as will be touched on below.) But he did have to do something, from a political point of view.

And so he met with members of the Congressional Black Caucus this Wednesday, in order to try to pretend to have a dialogue on poverty. It was not very much of a success. “We didn’t get a whole lot accomplished,” CBC chair Marcia Fudge said to the press afterward, but Ryan found it easy to pretend otherwise. “What is good out of this is that we need to talk about better ideas on getting at the root cause of poverty, to try and break the cycle of poverty.” Ryan also spoke about the need to “improve the tone” in the conversation about poverty — something that he himself might have thought about earlier, no?

The New York Times columnist argues that America’s large financial sector has done more harm than good

In his latest column for the New York Times, best-selling author and award-winning economist Paul Krugman argues that the financial sector of the American economy is not only outsized but that it’s hurting the economy and making Americans’ lives worse.

Citing journalist Michael Lewis’ new book on high-frequency trading — which opens with a story about an expensive tunnel being drilled for fiber-optic cable to cut down the communication time between Chicago’s futures markets and the stock market in NYC by three milliseconds — Krugman argues that American public policy has become overly influenced by high finance, with inequality and economic instability as a result. “[American] society,” Krugman writes, “is devoting an ever-growing share of its resources to financial wheeling and dealing, while getting little or nothing in return.”

After claiming that the large financial sector in the U.S. doesn’t increase overall prosperity and doesn’t promote economic stability, Krugman writes that its primary function seems to be to prey off of less powerful economic actors. “[Wall Street’s] playing small investors for suckers,” Krugman says, “causing them to waste huge sums in a vain effort to beat the market.” The result, Krugman posits, is a select few Wall Street players making a lot of private profits while contributing little to the overall public.

In short, we’re giving huge sums to the financial industry while receiving little or nothing — maybe less than nothing — in return. [NYU Professor Thomas] Philippon puts the waste at 2 percent of G.D.P. Yet even that figure, I’d argue, understates the true cost of our bloated financial industry. For there is a clear correlation between the rise of modern finance and America’s return to Gilded Age levels of inequality.

So never mind the debate about exactly how much damage high-frequency trading does. It’s the whole financial industry, not just that piece, that’s undermining our economy and our society.

Paul Ryan’s “Ayn Randian” economic philosophy has prompted him to put forth a budget that would affect the working class and very poor in the most adverse way, while giving the top 1% more tax breaks and other perks.

Rep. Paul Ryan’s (R-Wis.) proposed budget would reduce government spending outside of Social Security and interest on debt to its lowest levels in over six decades, Investor’s Business Daily reported Wednesday.

Ryan, the House Budget Committee chairman, unveiled his latest fiscal proposal on Tuesday, laying out $4.6 trillion in cuts over the next decade. The blueprint aims to balance the budget in 10 years by slashing Medicare, Medicaid and programs to aid the poor, including food stamps. Ryan’s plan would also repeal President Barack Obama’s health care reform law.

“This is not only a responsible, reasonable balanced plan,” Ryan said on Tuesday. “It’s also an invitation. This is an invitation to the president of the United States, to the Senate Democrats, to come together to fix these problems.”

Under the House GOP plan, government spending would hit its lowest levels in 65 years. Investor’s Business Daily’s Jed Graham reports:

By 2023, under Paul Ryan’s budget, the entirety of federal spending outside of Social Security and interest on the debt (16.4% of GDP in 2012) would shrink to 11.2% of GDP, a level not seen since 1948 — before ObamaCare, Medicare, Medicaid, NASA, the interstate highway system and almost before the first baby boomers were born.That is nearly 25% below the 14.6% of GDP average over the past 64 years. In the only three years over this span that saw spending on the main functions of government (outside of saving for retirement) dip just below 12% of GDP, the unemployment rate averaged 4.5% or less, shrinking safety net outlays while bolstering the spending capacity of state and local governments.

Graham also calculates that by leaving Medicare expenditures out as well as Social Security and interest, spending levels would shrink to 7.9 percent of GDP by 2023, the lowest level since 1938, before Social Security and Medicare programs were created.

For most Americans, a trip to London means drinking a few pints and maybe taking a picture of one of those guards with the hats. For Paul Krugman, it means critiquing the entire direction of Britain’s economic policy.

The Brits — venture capitalist Jon Moulton and Conservative Member of Parliament Andrea Leadsom — argued that the British government has to reduce spending if the country is to dig itself out of the economic slump it’s been in. Krugman countered that such a strategy could cause Britain’s economy to implode — since, he said, the public and private sectors need to circulate money to each other in order for anyone to prosper.

“We are not a household. We are an economy,” said Krugman. “Your spending is my income, and my spending is your income.”

As Krugman pointed out during the “Newsnight” segment, and later in a NYTcolumn, the austerity question is one that extends beyond Great Britain. Eurozone countries are in the midst of their own austerity struggle right now, one whose effects have been felt most strongly in Greece, where government spending cuts have resulted in riots and strikes and boosted the political fortunes of the far-left, anti-austerity Syriza party.

And in the United States, economists and politicians are engaged in an ongoing debate over the best way to jump-start the lagging economy — and here, too, Krugman hasrepeatedly counseled against the kind of major government spending cuts that conservative policymakers have championed.

Krugman’s argument is that such cuts would cause a major contraction in the American economy, a point that even Mitt Romney, the presumptive Republican nominee for president, appeared to echo in an interview with Time a few days ago.

Charles and David Koch, the owners of the country’s second-largest private corporation, are libertarians of long standing, who contend that government regulations, taxes and subsidies stifle individual initiative and hamper American competitiveness. In recent years, the Kochs have played an increasingly public role as financial angels for conservative causes, politicians and foundations.

What’s not so well-known is the activity of Koch Industries in the trenches in Washington, where a Center for Public Integrity examination of lobbying disclosure files and federal regulatory records reveals a lobbying steamroller for the company’s interests, at times in conflict with its public pose.

The money that Koch (pronounced “coke”) has spent on lobbying in Washington has soared in recent years, from $857,000 in 2004 to $20 million in 2008. The Kochs then spent another $20.5 million over the next two years to influence federal policy, as the company’s lobbyists and officials sought to mold, gut or kill more than 100 prospective bills or regulations. Continue reading here…

Although Gawker is somewhat skeptical about this new offering of email leaks from “Anonymous”, apparently the activist group is planning to expose Bank of America documents sometime today. If I were those folks in the financial industry, I’d be very afraid of what may be about to hit the proverbial fan…

A member of the activist collective Anonymous is claiming to be have emails and documents which prove “fraud” was committed by Bank of America employees, and the group says it’ll release them on Monday. The member, who goes by the Twitter handle OperationLeakS, has already posted an internal email from the formerly Bank of America-owned Balboa Insurance Company.

The email is between Balboa Insurance vice president Peggy Johnson and other Balboa employees. (Click right to enlarge.) As far as we can tell, it doesn’t show anything suspicious, but was posted by OperationLeaks as a teaser. He also posted emails he claims are from the disgruntled employee who sent him the material. In one, the employee says he can “send you a copy of the certified letter sent to me by an AVP of BofA’s [HR department] telling me I am banned from stepping foot on BofA property or contacting their employee ever again.”

OperationLeaks, which runs the anti-Bank of America site BankofAmericasuck.com, says the employee contacted the group to blow the whistle on Bank of America’s shady business practices. “I seen some of the emails… I can tell you Grade A Fraud in its purest form…” read one tweet. “He Just told me he have GMAC emails showing BoA order to mix loan numbers to not match it’s Documents.. to foreclose on Americans.. Shame.”

An Anonymous insider told us he believes the leak is real. “From what I know and have been told, it’s legit,” he said. “Should be a round of emails, then some files, possible some more emails to follow that.” The documents should be released Monday on Anonleaks.ch, the same site where Anonymous posted thousands of internal emails from hacked security company HBGary last month. That leak exposed a legally-questionable plot to attack Wikileaks and ultimately led to the resignation of HBGary CEO Aaron Barr.

There are lots of reasons to be skeptical about this latest supposed leak. For now, it’s a guy who hates Bank of America and posted a single internal Balboa email and some seriously outrageous claims to Twitter. (When emailed for comment he posted our email to Twitter with “Fuck you, Gawker.”) It’s unclear what he’s actually got. And the whole incident echoes the time Wikileaks claimed to have its own Bank of America bombshell leak, which turned out to be a dud.

But those we’ve spoken to in Anonymous are convinced there’s something to this. Anonymous has a proven track record with leaks, and Bank of America has been in their crosshairs since they cut off payments to Wikileaks in December. If it’s real, it could be big. Keep your eye on anonleaks.ch: It should hit Monday.

Update: The leak will drop at 12:00am on Monday morning. According to Reuters, a Bank of America spokesman has confirmed the existence of a leak, saying it consists of “non-foreclosure related clerical and administrative documents stolen by a former Balboa Insurance employee.” The spokesman told Reuters, “We are confident that his extravagant assertions are untrue.”

It’s about damn time! I’m hoping that the aftermath will weed out a few crooked Congressmen and Senators on both sides of the aisle, as well.

This is the sort of thing that allows me to maintain a little faith in the Obama administration. Just when you think those guys have muddled so many things in the name of “bi-partisanship”, they surprise us with this bit of news. I’m thinking, masterful chess move by the Feds and Obama.

The mortgage and foreclosure bankster scams should be next!

It goes back to John Kenneth Gailbraith and Jack Clark’s words…

ALL YOU NEED TO KNOW

The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.
John Kenneth Galbraith

Everything the right-wing does is designed to accomplish one of two things, either:
(a) transfer wealth from everyone else to the rich, or,
(b) distract everyone else from the fact that (a) is occurring.

Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders and analysts across the nation, according to people familiar with the matter.

The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say.

The investigations, if they bear fruit, have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say.

In my reporting, I regularly travel to banana republics notorious for their inequality. In some of these plutocracies, the richest 1 percent of the population gobbles up 20 percent of the national pie.

But guess what? You no longer need to travel to distant and dangerous countries to observe such rapacious inequality. We now have it right here at home — and in the aftermath of Tuesday’s election, it may get worse.

The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976. As Timothy Noah of Slate noted in an excellent series on inequality, the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana.

C.E.O.’s of the largest American companies earned an average of 42 times as much as the average worker in 1980, but 531 times as much in 2001. Perhaps the most astounding statistic is this: From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent.

That’s the backdrop for one of the first big postelection fights in Washington — how far to extend the Bush tax cuts to the most affluent 2 percent of Americans. Both parties agree on extending tax cuts on the first $250,000 of incomes, even for billionaires. Republicans would also cut taxes above that.

The richest 0.1 percent of taxpayers would get a tax cut of $61,000 from President Obama. They would get $370,000 from Republicans, according to the nonpartisan Tax Policy Center. And that provides only a modest economic stimulus, because the rich are less likely to spend their tax savings.

At a time of 9.6 percent unemployment, wouldn’t it make more sense to finance a jobs program? For example, the money could be used to avoid laying off teachers and undermining American schools. Continue readng…